Sunday, August 1, 2010

Stocks on the Dubai Financial Market (DFM) plummeted over the last month as Dubai World failed to reassure investors about the prog-ress of its debt restructuring.

The DFM recorded a decline of 11.8 per cent in January, the steepest fall of all equity markets in the Middle East during the month, according to a report released yesterday by Rasm-ala Investment Bank.

This descent was largely driven by investor confidence in Dubai  taking a serious dent as a result of the Dubai World debt crisis, said Tudor Allin Khan, chief economist at Al Futtaim HC Securities.

“It all centres around the big issue of Dubai World and Dubai debt,  the uncertainty and the ‘what if’ scenario,” Allin Khan told 7DAYS.

“We have found our correction.

The days of moving down five per cent have passed because people have sold out and investors that we speak to are waiting for clarity on the Dubai World debt,” he added.  

Dubai World was unavailable for comment when contacted by 7DAYS yesterday.

Human Al Shamaa, an analyst at Al Fajr Securities is sceptical however, about whether the debt issue has been most responsible for the significant decline in the DFM last month.

“I don’t think it is directly connected to the restructuring.

But rather, it is connected to a question of liquid-ity in all of the GCC markets,” he said. “I think unless we find a solution to the problem of financial and monetary flow, [the DFM] will continue to go up and down.”

Trading on the DFM rose yesterday but just by 0.86 per cent as investors remained in the dark about the restructuring process.